Debt Counselling is a formal legal process that provides for a consumer to be declared over indebted and for the Debt Counsellor to negotiate a restructured payment plan and obtain a court order confirming the new repayment plan. The Debt Counsellor must be registered with the National Credit Regulator and have an NCRDC number. The NDMA uses the services of a registered debt counsellor.
Once declared over indebted and accepted into debt counselling the following will happen:
For as long as you are under debt counselling you will not be allowed to get credit until you are issued with a Clearance Certificate once you have satisfied your obligations as per the Court or Tribunal order and in line with the National Credit Act.
The overall objectives for the DEBT COUNSELLOR is to:
The overall objectives for YOU should be:
The overall objectives for your CREDITORS should be:
Will I have to pay for the service?
Yes – the service is not free, there are recommended fees laid down by the National Credit Regulator (NCR) and the fee guidelines are available from the NCR website at www.ncr.org.za. How these fees are paid is explained in the table below.
|DEBT COUNSELLING FEE GUIDELINES|
Visiting the Debt Counsellor
Before you visit the debt counsellor you will need to gather together the following documents:
If you and your spouse/partner share your income and expenses or are married in Community of Property then:
Explaining the assessment process/outcome/notification
Payment Distribution Agents
Once accepted under debt counselling you will pay one instalment which will then be distributed to your credit providers by a Payment Distribution Agent. The PDA is also responsible for the provision of monthly statements to consumers and payment schedules to debt counsellors, employers and credit providers as well as attending to queries from the respective parties. As a consumer you can choose to continue to pay your creditors directly and not use a PDA.
If you opt to make direct payments you should be aware of the following:
Termination (Cancellation) of Debt Review
Under certain circumstances a credit provider can withdraw a credit agreement from debt counselling (Terminate) and proceed with legal action. Termination can happen if you default on your debt counselling payments or if your debt counsellor does not finalise the process within the prescribed time limits.
The Credit Amendment Act, 19 of 2014 determines that a credit provider is not entitled to terminate debt review after the debt counsellor has referred the matter to the Magistrate’s Court for a debt review order while the hearing is still pending.
The National Credit Amendment Act allows you to be issued with a Clearance Certificate after you have settled all your unsecured loans and settled the arrears of your homeloan. Below is a detailed explanation:
The National Credit Amendment Act and its Regulations now allows you to exit debt counselling earlier than before. Section 71 now requires a debt counsellor to issue you with a Clearance Certificate within seven days if the following conditions are met:
a)You have settled in full all the debts in terms of the agreement or court order; OR
b)You have settled all the short term credit agreements, cleared the arrears on your mortgage or any prescribed long term agreement: AND
c) You demonstrate the financial ability to meet any future obligations towards your mortgage or any prescribed large agreement.
After issuing you with a Clearance Certificate, a Debt Counsellor must within seven days file a certified copy of the Clearance Certificate with a registered Credit Bureau. Once a Credit Bureau receives the Clearance Certificate, they must remove from their records the following information:
a) The fact that you were under Debt Counselling;
b) Any information relating to any default by you that:
i. Happened before you went under Debt Counselling; and
ii. May have been considered in making the debt counselling order.
c) Any record that a particular credit agreement was subject to Debt Counselling.
Dealing with Clearance Certificate Disputes
a) If the Debt Counsellor does not file the Clearance Certificate with the Credit Bureau or does not do so within the required timeframes you can file a complaint with the National Credit Regulator;
b) If the Debt Counsellor refuses or fails to issue a Clearance Certificate, you can appeal that decision at the National Consumer Tribunal.
Withdrawing from Debt Counselling
!!!!It is very important that you think very carefully about going under debt counselling because once you have been declared over indebted and accepted into the process it will be very difficult to withdraw from the process and even more difficult to remove the Debt Counselling flag from your credit bureau record. Below is an extract from the Guideline:
CAN A DEBT COUNSELLOR TERMINATE OR WITHDRAW DEBT REVIEW PROCESS?
A debt counsellor does not have statutory powers to terminate or withdraw the debt review process. This means that a debt counsellor can no longer issue Form 17.4 and update DHS with status G (Voluntary withdrawal by consumer) or H (Withdrawal by a debt counsellor). There is However varied ways in which a consumer can be withdrawn from debt review which will be set out below.
CAN A CONSUMER WITHDRAW FROM DEBT REVIEW PROCESS ONCE A DEBT REVIEW COURT ORDER HAS BEEN OBTAINED?
Once a debt review court order has been obtained a consumer cannot terminate or withdraw the debt review process, they can however approach the court to rescind the order or apply for an order which declares that the consumer is no longer over-indebted. Upon receipt of the order, a debt counsellor will notify the credit providers of the withdrawal by means of Form 17.W and update DHS with status G.
CAN A CONSUMER WITHDRAW OR TERMINATE DEBT REVIEW PROCESS PRIOR TO OBTAINING DEBT REVIEW COURT ORDER?
Consumers can only withdraw or terminate the debt review process prior to declaration of over indebtedness as per section 86(7) of the Act and issuance of Form 17.2 subject to payment of debt counselling fees as per NCR Debt Counselling Fee Guidelines. If a determination is made and no court order is in place, the consumer will remain under debt review. A debt counsellor will notify the credit providers of the withdrawal by means of Form 17.W and update DHS with status G.
CAN A CONSUMER BE TRANSFERRED TO ANOTHER DEBT COUNSELLOR?
A consumer under debt review may be transferred to another debt counsellor subject to payment of all debt counselling fees where it has been established that the previous debt counsellor followed the correct process. • Form 17.7 should be used to facilitate this process.